10 Top Tips for Succession Planning in your Family Business

better tourism mindset sustainability sustainable tourism Nov 09, 2022
10 Top Tips for Succession Planning in your Family Business

Succession and Sustainability

A 2016 survey by DCU revealed that there are 167,800 family businesses in Ireland, employing about two thirds of our workforce. The 2021 PWC Family Business Survey showed that only 23% of Irish family businesses have a robust, documented and communicated succession plan in place, compared with 30% globally . 

Family businesses are not only the cornerstones of the destination, they are cornerstones of the community within that destination. This makes the success, legacy and continuity of family businesses central to the long-term sustainability and regeneration of communities and places.

Succession Planning is topic I’ve long wanted to bring to The Huddle, our peer-to-peer learning and networking space, because I know the very idea of it causes fear, worry or avoidance in the hearts and minds of many of the business owners I’ve worked with.

 

Enter Mary Fitzgerald, Proprietor of Fitzgeralds Woodlands House Hotel & Spa

From humble beginnings as a 4 bedroomed farmhouse offering guest accommodation just over 45 years ago, Mary Fitzgerald has grown her business into the 4-star, award-winning Fitzgeralds Woodlands House Hotel & Spa. Mary's hotel has Guaranteed Irish accreditation thus demonstrating their commitment to exemplifying a unique Irish family hospitality experience. Mary is proudly assisted by her four children who work in the business as well as a team of over 200 employees in Adare, Co. Limerick, Ireland.

 

It's not surprising that Mary has invested considerable thought and time into Succession and Generational Planning. I was very grateful that she agreed to share her insights with me and others in the November Huddle.

 

10 Top Takeaways

All our Huddle guests are invited to not only tell their story, but teach it as well. With this in mind, I listened intently to what Mary had to say and also to the questions and comments made by others in The Huddle. Here were the main takeaways for me:

 

1. Take responsibility

Succession planning is about making decisions and it is the business owner who must take responsibility for leading the process and seeing it through to conclusion. The ideal desired outcome is a family in harmony and a business that becomes stronger as it passes from one generation to the next. Failure to plan for succession risks having the opposite, worst-case outcome: a broken family and a broken business.

 

2. Own the impact of your decisions

Mary spoke extensively about the impact of clarity (or lack of it) on the family, on the team, and importantly on the wider community. With more than 250 employees, Fitzgeralds Woodlands House Hotel is a significant employer in Co. Limerick and an important part of the community dynamic. Decisions that affect the sustainability of the business have far-reaching impact and it’s important to take responsibility for how these decisions will affect a wide number of people, both within and outside of the family.

 

3. Communicate openly and honestly

An open and honest communication process, that involves all members of the family, is essential. This should include family members who work in the business as well as those who don’t. It should include the immediate family members, as well as their spouses, partners and children. As Mary said, even if they don’t work in the business, they do have an influence on the business and are affected by it. The most important thing is to build and maintain trust.

 

4. Start early

Succession planning is not an endgame, it’s a journey. The conversation needs to start when family members are young, even in their teens, so that there is inclusion and awareness from early on. Mary knew of families where the communication started too late, when children were in their thirties and had by then committed to another career or location. It’s key to build the competency of family members as you journey through the business together.

 

5. Sort it out before your energy runs out

Mary invited others to ask themselves some fundamental questions: where’s all this going to go? where’s it going to end? when is my energy going to run out?  It’s common sense: if you don’t have the plan made, shared and agreed well in advance of when your energy runs out, then you expose yourself to the high risk of making poor decisions.

 

6. Avoid emotional decision-making

Decisions regarding the strategy and future of the business should not be dictated by emotions. Creating a business strategy with a succession plan based on the needs and potential of the business is advisable. Unfortunately, families may find themselves unexpectedly in very emotional circumstances that affect the business e.g. illness or accident. Without a plan in place, it can be a very difficult time to navigate. As well as that, family members may also have different personal ambitions and expectations - one may want a career break, another may want to retire early, another may want to expand while yet another may want to cash out. The plans for the continuity of the business should be separate from circumstances and independent of individual ambitions and expectations.

 

7. Make sure family members work for somebody else

“Everyone should have another boss” is what Mary shared. There is nothing but benefits from that. It allows them time to mature and forge an independent path, to develop their professional profile and skills away from the influence of family. When they return to the family business, they bring back new ideas, new skillsets and their own perspective that will enrich the business.

 

8. Set a standard for working in your family business

Mary shared the case of relations of hers in Australia who have a highly successful family business spanning multiple generations. They have created a Family Charter that defines the criteria any member of the family would have to meet in order to participate in the family business.  A charter avoids accession to a management role in the family business being automatic. It defines what family members must know or do before joining the business. It sets a transparent standard that balances the interests of the business with the interests of the family.

 

9. Mind your stars

Mary referred to her four children as her four stars and highlighted her awareness of the need to respect them as professionals and to be mindful of their careers and their family life. She really emphasised the value of having open and honest conversations throughout the journey. It made me think of how challenging it must be to make sure that all family members have sufficient incentive, reward and satisfaction for them to stay with the business.

 

10. Get lots of advice

Don’t rely on just one advisor and one perspective. Ask questions of others who are in the same situation, or who have travelled the road before. Seek help from professional experts and financial specialists. Educate yourself through training or coaching. Advice will differ and ultimately it will be the responsibility of the family to distil the advice and reach the decisions that best balance the needs of their business with the needs of the family.

 

Tina O'Dwyer

The Huddle is an online community for tourism and hospitality professionals to network, connect, share and grow. Each month there is a guest speaker invited. Mary Fitzgerald took part in the first of a 2-part Huddle series on Generational and Succession planning. The second part will happen on the 12th December 2022. To sign up and learn more please visit www.thetourismspace.com/huddle. By registering you will gain access to the recordings of each speaker.

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